CAIRO: Orascom Telecom (OT) and sale consultant EFG Hermes are currently reviewing bids for the sale of OT subsidiary LinkDotNet.
The sale, which was postponed in January, resumed in July with Mobinil, Vodafone, Telecom Egypt and two other unnamed financial institutions submitting bids at the end of the month. Vodafone has since retracted its offer.
“The sale represents another key step in the implementation of our stated strategy to dispose of our non-core assets and focus on our GSM business, Orascom Telecom Chairman Naguib Sawiris said in a statement in February.
Telecom Egypt, which holds 59 percent of the market for internet services through its TE Data operation and 45 percent of LinkDotNet, would attain a 90 percent market share were its bid for LinkDotNet to go through.
“LinkDotNet is the second player after TE Data in the internet market, so I don’t see how Telecom Egypt would not have a monopoly by acquiring Link, said Sally Gerges, a telecom analyst at Beltone Financial.
“The Chairman of the NTRA stated that the acquisition would not be in conflict with Egypt’s monopoly laws, but it would make more sense for Mobinil to acquire link to achieve balance in the internet services market, she continued.
Mobinil’s head of commercial operations Yasser Radwan said Wednesday that Mobinil would seek an alternative for the LinkDotNet acquisition should another company win the bid, MENA reported.
“The purpose of such a deal is to provide the user with high-speed value added services, however technical solutions could be offered without the need to fixed network, Radwan said.
“If the Link deal goes to another competitor, Mobinil will use available alternatives whether through obtaining internet services license by fixed lines, acquiring another internet provider company or providing internet services via mobile phones, he continued.
Radwan told MENA that if Mobinil were to win the deal, the two companies would cooperate to provide integrated services such as Triple Play packages, which combine the transfer of sound, image and data.
Mobinil is Egypt’s largest mobile operator by subscribers and is 35 percent owned by Orascom.
“Acquiring Link would boost Mobinil’s internet sector because all mobile providers are now capitalizing on the potential of mobile broadband, said Gerges.
Vodafone dropped out of the running last week, stating that it will direct investments in the broadband market through its subsidiary, Raya for Telecommunications, instead of pursuing the purchase of LinkDotNet.
Vodafone CEO Hatem Dweidar said his company decided to drop out of the bidding after Orascom Telecom demanded that the purchaser of LinkDotNet would keep the company’s existing 1,200 employees, Bloomberg reported.
“Telecom Egypt owns 45 percent of Vodafone, so Vodafone shouldn’t have bid for LinkDotNet in the first place, and that is why they are backing off now. They acquired Raya Telecom in 2007, so they already have investments in the internet sector through that deal, explained Gerges.
Which company will win the bid remains unclear. Gerges says that though a Mobinil acquisition would make the most sense given ties with Orascom and market distribution, business considerations will ultimately prevail.
“Ideally, OT would want Mobinil to win the bid, but they will have to go through the legal tender process and the company has said the sale will go to the highest bidder.
